After a dramatic drop in Champagne sales, the owner of Moet & Chandon and Krug has a post-pandemic ‘hangover.
LVMH, a French luxury goods company, saw its wine and spirits sales plummet 16pc to €1.4bn ($1.2bn), during the first quarter 2024.
Dom Perignon and the company that owns it also said on Tuesday that this was due to “the normalisation” of post-Covid demands.
The demand for champagne has been at an all-time high during the pandemic and in the immediate aftermath.
Both 2021 and 2020 saw record sales of champagne. In 2022, global champagne shipments reached a record 326m bottles. This is the highest number since 2008. This marked a significant increase from the 245m champagne bottles shipped in 2020. It was the lowest level for more than 20years.
Philippe Schaus (LVMH’s chief executive officer for wines and spirits) said that in 2022, the demand for bottles bubbly was so high that the company called it the “roaring 1920s”.
The strong dollar has prompted American consumers to purchase French fizz.
After production cuts and labor shortages, suppliers were scrambling to meet the demand.
Comite Champagne, the industry’s body, reports that champagne sales dropped 8.2pc last year to 299m bottles.
LVMH, which is the largest producer of champagne in the world was able to achieve a slight sales increase in the last quarter of 2023, as Europe and Japan compensated for the weaker US market.
The latest results show that the bubble of champagne has finally burst, as consumers struggle with inflation and cost-of-living crisis.
LVMH said that Hennessy, which it also owns, was again hampered in its biggest market, the US, by retailers’ uncertainty.
LVMH’s group revenue decreased 2pc, to €20,7bn, during the first quarter of 2024. This is the company run by Bernard Arnault.
The company that also owns Tiffany & Co. and TAG Heuer reported a drop of 5pc in sales for watches and jewellery.
The statement said that LVMH has had a successful start to the new year despite an uncertain geopolitical environment and economy.